Navigant Releases Solar Technology Report

The solar power industry and its associated technologies, including concentrated solar power (CSP), photovoltaic (PV), and concentrated photovoltaic (HCPV and LCPV), are going through a significant correction as a seven-year period of capacity building, aggressive pricing, and promises of grid parity — driven largely by feed-in tariffs — comes to an end. According to the 7th annual “Analysis of Worldwide Markets for Solar Products and Five-Year Application Forecast 2011/2012,” released by Navigant, while low prices for PV technology have led to increasing installations, these prices are also likely to lead to lower quality technology and installations, possibly resulting in a backlash against solar power, perhaps globally.

Average PV module selling prices at the first point of sale declined from $3.50 per watt in 2007 to $1.09 per watt in the first quarter of 2012, even as the PV industry grew from just over 3,000MWp of annual volume to nearly 24,000MWp over the same period. The report concludes that, under a conservative scenario, total industry size is forecast to expand to nearly 25,800MWp in 2013.

“Low prices and generous tariffs have led directly to the expectation of even lower prices, even as manufacturing capacities have increased and new market entrants have flooded the industry, most assuming that the outcome would be high profits,” says Paula Mints, director of solar research. “For technology suppliers, the expectation that prices will consistently decrease has led to painful consolidation and failure. Certainly, selling less and losing less would be in the industry’s best interests. Historically, however, the PV industry has behaved in a manner that indicates growth is the desired state, even if this growth is unprofitable. All this aside, solar is not going away and will play an important part in the future energy mix.”

PV prices began declining sharply in 2009, as technology suppliers in Taiwan and China began aggressively pricing for market share. This period coincided with generous feed-in tariff rates in Europe. As these incentives reach the end of their planned lifespans, the industry is faced with developing more sustainable business models at a time of global economic stagnation and fierce competition from other energy sources, particularly low-cost natural gas. Given high levels of capacity, mounting inventory, and decreasing incentive levels, PV industry growth could be flat to negative for the next couple of years, the report concludes.

The report, “Analysis of Worldwide Markets for Solar Products and Five-Year Application Forecast 2011/2012,” analyzes the global markets for solar power, specifically the PV sector, including in-depth analysis of its 41 applications. The drivers and inhibitors for future growth are examined, along with the macroeconomic and policy factors that will influence the industry over the next several years. In addition, market forecasts are included for the major solar PV application segments through 2021, and for specific technologies, including CPV, CSP, and high-concentration PV, through 2016. The report also provides forecasts for the overall PV market by region through 2014, under reduced incentive, conservative, and aggressive scenarios.

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